Commercial Chap 11 (Note 2)

• What is the term used when a person bears the accidental loss of goods?

  Risk
• What can cause a contract for the sale of goods to be totally frustrated?

  An extraordinary and usually unforeseeable event
• How are the doctrines of risk and frustration related?

  They are interconnected in various ways
• What happens if an executory contract is frustrated?

  Neither party is under any liability to the other
• If goods perish while at the seller's risk, what is the buyer's liability?

  The buyer is not liable for the price
• What must the seller prove to be exempted from liability for non-delivery?

  The seller must prove frustration
• What is the buyer's liability if the goods are at their risk and perish?

  The buyer is liable for the price
• What can discharge the buyer from liability for non-acceptance?

  Only frustration can discharge the buyer
• What are the main topics covered in the next three sections regarding risk and frustration?

  • Transfer of risk
  • Frustration
  • Effects of frustration
• How does the Sale of Goods Act relate to unascertained goods?

  It fails to draw distinctions between different types of unascertained goods
• What does s. 20(1) state about the transfer of risk?

  The risk passes with the property
• When do goods remain at the seller's risk according to s. 20(1)?

  Until the property in them is transferred to the buyer
• What happens to the risk when property is transferred to the buyer?

  The goods are at the buyer's risk whether delivery has been made or not
• What is the effect of an express agreement regarding risk in a sale?

  It must be given effect even if one party has no property
• What does the rule res perit domino imply?

  The risk generally remains with the owner of the property
• In what situation can the transfer of risk be separated from the transfer of property?

  When goods are shipped under c.i.f. or f.o.b. contracts
• What was the case of Sterns Ltd v Vickers Ltd about?

  It involved the deterioration of spirit sold but not yet delivered
• What did the Court of Appeal hold in Sterns Ltd v Vickers Ltd?

  The risk had passed to the buyers despite property not passing
• What does the 1995 Act allow regarding property in an undivided share?

  It permits property to pass to the buyer
• What is a crucial factor in determining risk in the case of Sterns Ltd v Vickers Ltd?

  The acceptance of the delivery warrant by the buyer
• How does the case of Healy v Howlett d Sons differ from Sterns Ltd v Vickers Ltd?

  The risk remained on the seller despite similar facts
• What principle does the case of Head + Tattersall illustrate?

  The risk remains on the seller when the buyer has a right of rejection
• What happens if the seller ships defective goods?

  The risk remains on the seller until the buyer accepts the goods
• What does s. 33 state about the seller's risk during delivery?

  The buyer takes any risk of deterioration during transit unless otherwise agreed
• What is the implication of deterioration due to defective condition at the start of transit?

  It is not covered by the provision of risk during transit
• What does the implied condition of merchantable quality involve?

  A continuing obligation regarding the condition of goods after shipment
• What is the relationship between the seller's warranty and risk of deterioration?

  If the seller has continuously warranted the condition, they remain liable for deterioration
• What happens if goods are accidentally destroyed after property has passed?

  The buyer must pay the price even if the seller cannot deliver
• Why might a buyer be surprised about liability after a shop fire?

  They might not expect to pay for goods that were destroyed
• What could happen if the buyer is required to pay the price after a shop fire?

  The seller might be a constructive trustee of the insurance proceeds for the buyer
• What does section 28 of the Act state about payment and delivery?

  Payment and delivery are concurrent conditions.
• What happens if goods are accidentally destroyed after the property has passed?

  The risk has also passed, and the buyer must pay the price.
• Why might it be surprising for a buyer to learn they are liable for the price if the shop burns down?

  Because the buyer may not expect to pay for goods they cannot receive.
• What is the implication of the seller being a constructive trustee of the insurance proceeds?

  The seller may hold the insurance proceeds for the buyer's benefit.
• Who is typically responsible for insuring goods in retail sales?

  The party with physical possession is usually responsible for insurance.
• In a hire-purchase agreement, who is obligated to insure the goods?

  The person in possession, the hirer, is obligated to insure the goods.
• What does section 20 state about risk when delivery is delayed due to fault?

  The goods are at the risk of the party at fault for any loss incurred.
• What does subsection (2) of section 20 imply about the duties of the seller and buyer?

  Both parties have duties as bailees of the goods of the other party.
• In the case of Demby Hamilton & Co Ltd v Barden, who was held liable for the spoiled juice?

  The buyer was held liable for the spoiled juice.
• What does subsection (3) of section 20 state about the obligations of parties at fault?

  The party at fault is still bound to take reasonable care of the goods.